Roadmaps and refineries

Looking for somebody to blame for the high price of oil? Energy analyst Johannes Benigni, managing director of PVM Vienna, says don’t look at OPEC.
He fingers the refining industry for not investing enough in infrastructure, creating bottlenecks which have helped jack up the price. Now Saudi Arabia and a Houston company are helping fill in the gap.
Saudi Arabia’s oil minister Ali Naimi announced today that ConocoPhillips made the best offer to build a $5 billion, 425,000 barrel per day plant in Yanbu on Saudi’s west coast. France’s Total is in the lead to construct another $5 billion refinery on the east coast at Jubail, according to news reports.
But Benigni worries that President Bush’s recent State of the Union address calling for less Mid East oil is divorced from reality and could actually work to keep prices high because it will not encourage OPEC members to continue expanding their output.
“The problem is the signal to the OPEC countries. Everyone who’s investing needs a roadmap for demand,” he said. “Now the U.S. government is saying we need less OPEC oil. This is clearly a demotivating factor for them.”
The U.S. Dept. of Energy recently revised its forecast for 2025 saying many millions of barrels of oil less will be needed from OPEC. Benigni isn’t buying it.
“This is a miscalculation because they assume there will be much more non-OPEC supply from Russia and other places. We looked into the assumptions and, in our view, they are completely wrong,” he says.